Matters relating to the ATO, ASIC and the AGD
As foreshadowed at the beginning of this report, this chapter examines
whether the Australian Taxation Office (ATO), the Australian Securities and
Investments Commission (ASIC) and the Attorney-General’s Department (AGD) ought
to be subject to Australian Commission for Law Enforcement Integrity's (ACLEI)
The chapter first sets out two earlier parliamentary inquiries that have
touched upon the inclusion of these agencies in one form or another. It then
considers the key evidence tendered to the committee regarding each of those
Operation of the LEIC Act inquiry
In July 2011, this committee (PJC-ACLEI) tabled its final report into
the operation of the Law Enforcement Integrity Commissioner Act 2006.
The inquiry, which was initiated in 2009, sought to examine the merits of
expanding ACLEI's jurisdiction to include other Commonwealth departments and
agencies with either law enforcement functions or coercive powers.
It is important to note that at that time, ACLEI's jurisdiction applied to the ACC
(including the former National Crime Authority) and the AFP.
The committee made numerous recommendations about the operation of both
the LEIC Act and ACLEI's jurisdiction. The committee supported the expansion of
ACLEI's jurisdiction to encompass a 'second tier' that would include specific
agencies within a more limited form of ACLEI's jurisdiction. The second tier
would operate on a voluntary basis, in that corruption issues could be
voluntarily referred to the Integrity Commissioner by an agency head or
This is distinct from current arrangements, where agency heads are required to notify
the Integrity Commissioner of corruption issues within their agency.
The agencies recommended by the committee for inclusion within the
proposed second tier jurisdiction included the ATO, AUSTRAC, CrimTrac, the then
Australian Quarantine and Inspection Service (AQIS) and the then Department of
Immigration and Citizenship.
With the exception of the ATO, these agencies (current and former) are all now
subject to ACLEI's jurisdiction.
With regard to the ATO, the committee noted that while not a traditional
law enforcement agency, the organisation has significant law enforcement
functions and works collaboratively with the ACC and AFP.
The committee found that:
In addition to the intrinsic value of the information held by
the ATO and its role in collecting revenue for the government, the ATO has a
significant law enforcement function, investigating tax fraud and ensuring
compliance with taxation legislation. In doing so, it works closely with law
enforcement agencies, notably the ACC...
The committee considers that it would be beneficial to
include the ATO in a tier two oversight arrangement, particularly in light of
the ATO's involvement in investigations targeting serious and organised crime...
In February 2012, the Government responded to the committee's
recommendations. In noting the committee's second tier recommendation, the
Government stated a preference for recent increases in ACLEI's jurisdiction to
be 'bedded down' prior to further expansion:
Before considering the inclusion of new agencies within
ACLEI's jurisdiction, the Government considers that it is appropriate to allow
12 to 18 months for ACLEI to consolidate existing jurisdiction following the
inclusion of [Customs]. That experience then be used to properly inform any
further expansion of ACLEI's functions.
Criminal intelligence inquiry
In May 2013, the Parliamentary Joint Committee on Law Enforcement (PJC-LE)
presented a report to Parliament into the gathering and use of criminal
That inquiry examined substantive issues around the collection and
dissemination of criminal intelligence information between commonwealth law
enforcement agencies, some of which are currently subject to ACLEI's
In the report, the PJC-LE noted the earlier inquiry of PJC-ACLEI had
recommended the inclusion of some additional agencies, including the ATO,
within ACLEI's jurisdiction under the 'second tier' model.
The PJC-LE also noted the development of the Australian Criminal
Intelligence Model (ACIM), which 'will facilitate better [criminal
intelligence] information sharing across agencies, including law enforcement,
policy and regulatory agencies.'
At the same time the PJC-LE acknowledged that 'law enforcement and other
government agencies are vulnerable to corruption by reason of their use or
knowledge of information technology systems and processes.'
In this regard the PJC-LE stated that 'many Commonwealth agencies who have
endorsed the ACIM are currently under the purview of ACLEI. These include the
ACC, AFP and [Customs]. CrimTrac will come under ACLEI's oversight from 1 July
However the PJC-LE expressed concerns 'that three Commonwealth agencies [the
ATO, ASIC and the AGD] that have endorsed the model and will gain access to
sensitive information and intelligence through the national repository are not
subject to the oversight of the ACLEI.'
To address this concern the PJC-LE decided that further investigation
was required into the possible expansion of ACLEI's jurisdiction. Accordingly,
the PJC-LE recommended that:
...the Parliamentary Joint Committee on ACLEI (PJC-ACLEI)
[inquire] into the feasibility of extending ACLEI's jurisdiction to include
ASIC, the AGD and the ATO. The [PJC-LE] committee recommends that the PJC-ACLEI
consider whether these three agencies should be brought under ACLEI's
jurisdiction on a whole-of-agency basis by regulation.
As discussed earlier in this report, this recommendation, along with the
committee's ongoing interest in this area, led to the initiation of this
inquiry into ACLEI's jurisdiction.
Australian Taxation Office
As described above, the question of the potential inclusion of the ATO
within ACLEI's jurisdiction largely revolves around access to sensitive law
In evidence, Mr Malone, Assistant Commissioner in the Fraud
Prevention and Internal Investigations area, gave an overview of the number of
integrity complaints received by the ATO on an annual basis. He indicated that
295 integrity complaints had been received in 2011-12; followed by 187 in
2012-13; and 241 in 2013-14.
Of the integrity complaints received, Mr Malone explained that approximately 20
per cent are substantiated.
This equates to a range of approximately 36–60 established integrity breaches
per annum over recent years.
Mr Malone acknowledged that like other large agencies, the ATO was not
immune to integrity issues, but argued:
...relative to the size of the organisation...I do not think we
have any more issues or less issues than other people. I would say that they
are quite well managed.
Internal integrity risk management
Mr Malone outlined the ATO's internal integrity framework:
The ATO maintains a dedicated and experienced fraud
prevention and internal investigations branch that investigates allegations of
fraud and serious corruption by ATO employees. Whilst it has no statutory
powers, it has the capability to conduct most facets of a criminal
investigation, including the submission of briefs of evidence to the
Commonwealth Director of Public Prosecutions. Several of these investigations
have resulted in successful prosecutions and lengthy terms of imprisonment for
those employees found to have acted corruptly.
While not subject to its jurisdiction, ACLEI noted that the ATO has one
of the most highly respected professional standards units of the entire
Australian Public Service.
ACLEI also acknowledged that the ATO goes one step further, by volunteering
information to ACLEI that helps both agencies stay in close cooperation:
The [ATO professional standard unit] works closely with
several law enforcement partners on investigations and detection operations
and, with the AFP, has achieved a number of corruption-related prosecutions
relating to its staff or former staff. On its own initiative, the ATO maintains
links with ACLEI to keep itself informed of developments in the anti-corruption
threat picture, and to apprise ACLEI of its own anti-corruption activities.
Arguments for inclusion
ACLEI noted that of the three Commonwealth agencies discussed in this
chapter (the ATO, the AGD and ASIC), 'the case for inclusion appears strongest
for the ATO'.
ACLEI explained that this was because the ATO is 'both a user and contributor
of law-enforcement related information, and a primary partner in joint law
enforcement activities, such as Project Wickenby.'
Since the committee's public hearings the government has established the
Serious Financial Crime Taskforce. This new taskforce, established to fight
serious and organised financial crime, includes officers from the ATO, the ACC,
the AFP, the AGD, AUSTRAC and ASIC.
ACLEI suggested that if its jurisdiction were expanded to include the
ATO it would 'add significantly to the law enforcement anti-corruption system.'
ACLEI also noted the benefits that would flow to the ATO from its inclusion
within ACLEI's jurisdiction:
It is likely also that the coercive and intrusive
information-gathering powers available to the Integrity Commissioner would
assist the ATO in its management of its corruption and criminal infiltration
The ACC argued that an increase in ACLEI's jurisdiction to include
agencies such as the ATO would alter ACLEI's remit, given they are not
primarily law enforcement agencies. However, the ACC also observed that the ATO
(as well as DIBP, AGD and ASIC) contains high risk areas that 'would be
susceptible to corruption'.
Arguments against inclusion
ATO representatives appeared ambivalent on the question of whether the
ATO should be included within ACLEI’s jurisdiction. Mr Greg Williams, Deputy
Commissioner of Taxation, argued that the second tier proposal was the ATO’s
Ideally, the tier 2 arrangements that we have where the [Commissioner
of Taxation] can call on ACLEI in certain circumstances, to be honest, would be
our preferred outcome. Having said that, in terms of coming under ACLEI's
jurisdiction, we are open to that... We believe we do have robust internal
processes. What we would not want to see is a degradation of those, because we
think that is about prevention.
The committee notes the commentary regarding the potential inclusion of
the ATO within ACLEI's jurisdiction. While the ATO's preference is for a second
tier arrangement, the committee notes that this previously recommended model
has not been adopted by government, and is not likely to be implemented in the
The committee notes ACLEI's comments in support of the ATO's inclusion,
but also notes the lack of clear risk assessment information. While the
committee received some evidence about the numbers of integrity investigations
across the ATO, resulting on average to 36–60 substantiated integrity breaches
annually, no differentiation was made regarding the lesser forms of misconduct
and the more serious forms of corruption.
Accordingly, the committee believes that further detail is required to assess
the level of the integrity risks within the ATO. The committee therefore strongly
supports an independent assessment of the ATO's corruption risks, including an
examination of the likelihood of corrupt conduct within the ATO, its potential
consequences for the organisation, the government and the economy, and the
resourcing implications of inclusion.
The committee believes that an independent assessment of the ATO's organised
crime corruption and integrity risks, together with possible funding options is
critical in determining whether it should be included within ACLEI's
The committee recommends that the Government initiate an independent assessment
of the Australian Taxation Office's corruption risk profile, together with an
examination of the feasibility of including the Australian Taxation Office
within ACLEI's jurisdiction.
Australian Securities and Investments Commission
As the financial services regulator, ASIC is responsible for investor and
consumer protection in financial services, through the administration of the
Australian financial services licensing regime.
ASIC also performs functions as the consumer credit, markets and
corporate regulator, ensuring various financial market participants adhere to
financial services legislation, including the National Consumer Credit
Protection Act 2009, and the Corporations Act 2001.
ASIC integrity risks
As a self-acknowledged law enforcement agency, ASIC is responsible for
the investigation and prosecution of a range of criminal offences and civil
ASIC's submission notes however that at present, '[ASIC] has not had any
reported instances of serious and systemic law-enforcement relation corruption
ASIC submitted that its corruption risks are associated with its
regulator role, where:
Potential corruptors may stand to make a financial profit, or
otherwise enhance their commercial interests, by obtaining access to the
information and intelligence that ASIC collects as a result of ASIC's
regulatory functions. Alternatively, potential corruptors may seek to benefit
from favourable treatment such as the imposition of lower penalties, improper
determinations of relief applications, or other biased decisions.
ASIC's submission details its integrity risk management processes, that
include public interest disclosure frameworks, together with the Australian
Public Service (APS) Code of Conduct as important integrity measures.
The submission also describes ASIC's Professional Standards Unit, which:
...is an independent unit housed within ASIC's Chief Legal
Office with responsibility for investigating allegations of misconduct by ASIC
officers. Where appropriate, the Professional Standards Unit will refer
investigations to the AFP or the relevant State Police. Reports of misconduct
or corruption can be made by existing and ex-staff as well as by members of the
public via the whistleblower arrangements or as a complaint.
ASIC acknowledged that its staff may seek to gain profits or benefits for
themselves or others, or misuse ASIC powers and discretions for improper
purposes, protection of unlawful activities or manipulating surveillance and
However, at the hearing ASIC's Commissioner, Mr Greg Tanzer stated that 'there
does not seem to be a compelling case for including ASIC within the
jurisdiction of ACLEI...'
ASIC noted that ACLEI focuses on serious and systemic law enforcement
related corruption, and particularly, examines links between law enforcement
and organised crime.
As such, ASIC argued its operational activities rarely contain a 'strong nexus
with combating serious and organised crime.'
ASIC argued that its business processes also lower corruption risks. For
example, ASIC noted that its processes encourage decisions being made by more
than one officer, and that ASIC officers rarely operate away from central
With respect to the ACIM/ACIF criminal intelligence access issue, ASIC
submitted that 'ASIC's endorsement of the ACIM has not, in an appreciable way,
enhanced ASIC's access to sensitive information and intelligence'.
Furthermore, while it has previously and continues to access sensitive
information disseminated by the ACC, ASIC has a number of measures in place to
mitigate the type of risk described by the PJC-LE.
ACLEI noted that ASIC had provided the committee with a realistic
assessment about its law enforcement corruption risks. ACLEI further noted that
an expanded jurisdiction must be based on either a demonstrated connection to
law enforcement functions or a clear assessment of corruption risks.
In response to ASIC's evidence, the former acting Integrity Commissioner, Mr
Robert Cornall, observed that ASIC's written submission and ASIC officers' oral
evidence 'supported the position that [ASIC is] not in a high-risk environment'.
On the available information, the committee is persuaded that ASIC is
adequately addressing its integrity risks. The committee notes that ASIC
remains a relatively low risk target for serious and organised crime
infiltration. The committee also notes the various integrity measures set out
by ASIC. Further the committee notes that the level of ASIC's corruption risk,
due to its access to criminal intelligence, has not changed appreciably since
its endorsement of ACIM. Given ASIC's own processes, and the evidence presented
by ACLEI, the committee is satisfied that ASIC should not be included within
ACLEI's jurisdiction at this time.
The Attorney-General's Department (AGD) delivers programs and policies including
in areas that support, maintain and improve Australia's law and justice
framework, and strengthen our national security and emergency management.
Its submission notes that:
The Department is the central policy and coordinating element
of the Attorney-General's portfolio, for which the Attorney-General and
Minister for the Arts, and the Minister for Justice are responsible. ACLEI
falls within this portfolio, as do other agencies within the Integrity Commissioner’s
jurisdiction, namely the Australian Federal Police (AFP), Australian Crime
Commission (ACC), AUSTRAC and CrimTrac.
Like the two aforementioned agencies, the ATO and ASIC, the PJC-LE
recommended consideration of whether the AGD should be brought under ACLEI's
jurisdiction. The recommendation was made on the basis of the AGD's access to
sensitive criminal intelligence, via its participation in ACIM.
The AGD consists of three groups: Strategic Policy and Coordination;
Civil Justice and Legal Services; and National Security and Criminal Justice.
The AGD submission notes that only one of these groups could be classified as
having law enforcement functions, and even then only indirectly. Staff of the
National Security and Criminal Justice Group are responsible for matters in
relation to the Crimes Act 1901, the Australian Federal Police Act
1979 and the Telecommunications (Interception and Access) Act 1979.
Further, AGD officers perform background checks for the issuance of Aviation
and Maritime Security Identification Cards, assess applications for importing
firearms and make decisions in relation to parole of federal offenders.
The ACC noted that while the group of officers with access to sensitive
information within the AGD is small; the agency's inclusion is nonetheless
worthy of examination. Mr Chris Dawson, CEO of the ACC argued that the
regulatory function specifically involved in issuing of Aviation and Maritime
Security Identification Cards warranted consideration of inclusion within ACLEI's
By way of example, the Attorney-General's Department has
access to certain privacy information as it relates to persons that are
applying for access to maritime air transport sectors. That such information is
not broadly across the Attorney-General's Department, but there are very small
areas there. The submission we make is simply that it is an area that
government may wish to consider because of the type of information and the
persons who are seeking such access to areas of risk. That is a matter that is
worthy of consideration.
In a similar fashion to its comments about ASIC, ACLEI submitted that the
AGD had set out a realistic assessment of its corruption risks.
The AGD's submission contends that the staff responsible for the
identity card vetting processes, assessing applications for importing firearms
and making parole decisions were not carrying out "law enforcement
functions" as defined by the LEIC Act, nor do they have access to
While these staff may have an indirect involvement in law
enforcement issues, they do not have law enforcement functions as defined by
both section 5 of the LEIC Act and the further criteria developed by ACLEI. In
particular, they do not have access to the types of information or powers that
would make them attractive targets for corruption by serious and organised
crime, especially when compared with staff from agencies already within
jurisdiction. Their roles are limited to policy formulation and advice, the
delivery of Australian Government programs and some regulatory functions.
While the committee has recommended an independent corruption and
integrity risk assessment for the ATO, the committee does not support a similar
review of either ASIC or the AGD at this time.
Given its findings in relation to Agriculture, the committee is not
inclined to recommend partial inclusion of agencies or departments. This is
because in the committee's view the existence of 'grey spots' within
Australia's law enforcement integrity framework is problematic. Therefore, the
committee is not inclined to support the prescription of certain areas of
either ASIC or the AGD to ACLEI's jurisdiction by regulation at this time.
With respect to ASIC and the AGD, the committee is persuaded that their
overall corruption risks remain relatively low. While the committee does not
support ASIC's or the AGD's inclusion at this time, it will continue to monitor
the adequacy of ACLEI's jurisdiction into the future.
Finally, with respect to aviation and maritime security cards
arrangements at the AGD, the committee notes that the recent Government
response to the Ice Taskforce report announced changes to the eligibility
criteria of the cards.
The committee further notes that the tightening of the security card
eligibility criteria may increase the incentives for serious and organised
crime groups to gain influence within the approvals process, which in turn may
increase the corruption risk to vetting officers.
Legislation to implement these changes is currently before the Senate
and the bill has been referred to the Senate Rural and Regional Affairs
On the assumption that the bill is not considered by the Senate during the
upcoming Parliamentary sittings, the committee believes that it is appropriate
for the Government to examine whether officers responsible for the card
security vetting ought to be subject to ACLEI's jurisdiction by being transferred
to an agency within ACLEI's jurisdiction.
The committee recommends that the Government consider transferring the
responsibility for vetting Aviation Security Identification Cards and Maritime
Security Identification Cards to an agency within ACLEI's jurisdiction.
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